Eddy Groves and the tale of the many signatures

By Colin Kruger

19 January 2009 — 12:00am

YOU cannot accuse the founder of ABC Learning, Eddy Groves, of being a pessimist. He signed on for his second marriage last Thursday, to his long-time partner Viryan Collins-Rubie, in a characteristically lavish affair on the Gold Coast attended by close friends and family.

The sunset ceremony at The Villa, an exclusive venue complete with its own nine-hole golf course, drew howls of outrage from the many victims of ABC Learning's multi-billion dollar collapse.

Dr Le Neve Groves, who finalised her divorce from Mr Groves late last year, may not have been impressed either.

A battle royal is brewing in the Queensland Supreme Court between the two ABC Learning founders, Westpac's BT Securities and Citigroup over margin loans she allegedly guaranteed for her former husband that led to their collective shareholding in ABC Learning being wiped out by margin calls early last year.

In a steady drip of documents lodged with the Queensland Supreme Court in recent months Dr Groves has denied claims by her former husband, and the two margin lenders, that she guaranteed his margin loans, which totalled more than $40 million.

Advertisement

Dr Groves went as far as to claim in the court documents that her signature was forged on the guarantee documents with BT Securities. This is despite statements from the margin lender that its officers witnessed Dr Groves signing the documents.

At stake is $64.2 million, which is the amount Dr Groves is seeking from her former husband and the margin lenders. The figure covers the loss of shares allegedly lodged as security for her former husband's margin loans, which exceeded $40 million, plus more than $10 million in dividends owed to her that were pocketed by her former husband, according to Dr Groves.

In its statement of defence, BT provided details of meetings with the ABC Learning founders at which Dr Groves was allegedly briefed on the guarantees she was asked to provide, was handed documents, and returned them directly to the BT officials fully signed.

BT said that one of its representatives met the Groves in June 2005, and Dr Groves "executed" the documents giving the guarantee before she handed the documents back to the BT official. At a second meeting at a Westpac office in Brisbane, BT said, Dr Groves met two bank officials where she completed the guarantee by signing the lodging shares form which put the shares offered as security into a BT trust.

In reply to this defence, Dr Groves denies attending either meeting or providing her signature authorising the transaction. "The signature appearing on the documents referred to … which purport to be that of Dr Groves, were not written by Dr Groves," she says.

She also alleges that one of the BT officials present at both meetings falsely signed a document purporting to witness Dr Groves sign the guarantee document when the official "did not in fact see Dr Groves signing the said document".

Dr Groves also accused BT of "unjust or unconscionable" conduct in that the company did not discuss the alleged guarantee with her, or "take any steps to ascertain whether the effect of the alleged guarantee had been explained to Dr Groves by an independent third party".

Mr Groves's defence statement, lodged just before Christmas, supports the version of events provided by the margin lenders and defends him against allegations that he "unjustly enriched' himself at his former wife's expense.

The documents say that the $40 million worth of loans secured by Dr Groves's guarantee "were applied" to the benefit of both him and Dr Groves.

Mr Groves also denies that he pocketed $10.7 million worth of dividends paid on the shares owned by his former wife between 2002 and last year.

He said the dividends "were paid into an account in the joint names of" him and Dr Groves. Dr Groves countered that she did not have access to this account despite requests to her former husband to gain access to it.

The shares are ultimately worthless as ABC Learning investors are expected to lose everything in the collapse. But the transactions show how Mr Groves managed to fund a dream lifestyle apparently unaffected by the collapse despite taking great pride in not selling his share of the company.

According to the court documents, Mr Groves had already taken out four margin loans totalling $35 million as far back as May 2005, when he tried to consolidate all of the loans with BT Securities, which decided it did not have the "appetite" to take on them all. Mr Groves's BT loans eventually totalled more than $25 million.